6 years for drug trafficking disguised as medical pot business

SEATTLE — A real estate investor who attracted attention in Everett a dozen years ago for promising big things after buying up historic buildings that had gone to seed is facing six years in prison for drug trafficking.

Craig Douglas Dieffenbach, 51,was sentenced Friday in U.S. District Court in Seattle. He was caught running a criminal enterprise camouflaged as a medical-marijuana business.

The case was about targeting drug traffickers, not people who are ill or those interested in their care, U.S. Attorney Jenny A. Durkan said in a press release.

“A green cross in the front window does not grant a license to sell pounds of drugs out the back door,” she said.

According to court papers, Dieffenbach was a “silent partner” in Seattle Cannabis Cooperative. The business was among about 20 medical-marijuana dispensary operations raided by state and federal authorities in November 2011.

Dieffenbach’s prosecution caught attention because it came as Washington voters were preparing to endorse legalizing recreational marijuana use. Medical marijuana has been legal here since 1998. The state has yet to work out where the pot should come from.

Dieffenbach on Aug. 20 pleaded guilty to federal charges of conspiracy to distribute marijuana and conspiracy to commit money laundering.

As part of the plea, he admitted his marijuana dispensaries sold to people who didn’t have medical authorization and that the businesses actually were part of a multi-state operation involved in drug trafficking and money laundering.

The federal Drug Enforcement Administration was able to purchase more than eight pounds of pot from the business and also arrange delivery of another 25 pounds, court papers show. Moreover, Dieffenbach and a co-defendant were caught traveling with nearly 35 pounds of marijuana they’d purchased in Oregon.

In his plea, Dieffenbach acknowledged using drug profits to pay for modifications to homes used for pot growing. One of those homes was in north Snohomish County, where a pot-growing operation was uncovered, documents show.

Dieffenbach in his plea also agreed to assist the government in its investigation of others. That’s something he did in the 1990s, when he was caught up in a cocaine-trafficking case that sent him to federal prison for four years — a fraction of the sentence he could have faced.

In a letter to the judge this time, Dieffenbach wrote that “I really have no excuse other than I got involved in an industry that I should have stayed away from.”

While admitting he broke the law, he also acknowledged “A part of me wants to argue back and say what I had done was, or soon would be legal in societies (sic) eyes, and even the court’s eyes one day, but today it is not.”

Under federal sentencing guidelines designed to be tough on drug traffickers, Dieffenbach faced a mandatory minimum five years in prison. His attorney asked for leniency and no prison time in recognition of his client’s otherwise good behavior and cooperation with the government.

Dieffenbach in 2001 made headlines in Everett after buying up several down-in-the-heels buildings along Hewitt Avenue. He talked about big plans for redevelopment, welcomed the nickname “Hollywood,” and didn’t shy away from media attention.

That changed after scrutiny brought on by the City of Everett’s efforts to develop what became Comcast Arena.

Dieffenbach ceased being welcomed around city hall. Records showed Ed Hansen, then Everett’s mayor, personally took charge of negotiations to purchase from Dieffenbach land needed for the arena project. One of the mayor’s goals was to limit Dieffenbach’s ability to cash in big on property that the investor had snapped up just as the city’s arena plans were coming into focus.

In digging into Dieffenbach’s past, The Herald uncovered his criminal history, which was detailed in previously sealed federal court records.

In documents filed in this case, Dieffenbach’s attorney pointed out that his client hadn’t been in criminal trouble for more than 20 years and had even managed to keep information about his prior cocaine conviction a secret, including within his own family.

Dieffenbach in recent years has attracted most attention for messy litigation over a plan to market vodka named after guitar legend Jimi Hendrix.